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Living up to the great Morgan legend

Living up to the great Morgan legend
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First Published: Sun, Mar 16 2008. 11 23 PM IST
Updated: Sun, Mar 16 2008. 11 23 PM IST
Give him a walrus moustache and a cigar, and Jamie Dimon might look a little like his bank’s namesake founder. He has long had the same tough-talking, no-nonsense reputation as J. Pierpont Morgan. Circumstance is giving him added opportunity to emulate Morgan’s financial heroics.
A great panic in 1907 that started with a run on New York’s Knickerbocker Trust led to Morgan’s orchestration of a bail-out. He persuaded banker friends to pony up $50 million (Rs202.5 crore), an enormous sum at the time. He also stirred up the US government to offer $25 million, not to mention exhorting New York clergymen to preach “calmness and confidence”.
Just over a century later, Bear Stearns Cos. is playing the role of Knickerbocker Trust. And Dimon, who took over as chief executive of JPMorgan Chase and Co. in 2006, has stepped into Morgan’s shoes. He is being helped by government support from the Federal Reserve Board, which was founded largely in response to the events of 1907.
Pierpont Morgan’s intervention did indeed help avert a disaster. If nothing is done now, Bear Stearn’s problems could similarly inflame the already burning global liquidity crisis. So Dimon’s work as financial fireman might also go down in history.
But JPMorgan is a lot less powerful than J.P. Morgan. It’s hard to imagine Dimon locking Vikram Pandit, John Mack and Dick Fuld into a room until they agree on a rescue plan, as Morgan did with bank bosses of the day. This group has neither the funds nor the prestige necessary to stop a worldwide panic.
Even if the banking big shots were to sit down together, they’d probably just end up calling on the Fed anyway. A politician long ago said: “We may not always have a Pierpont Morgan with us to meet a banking crisis”. How true. Not even the finest cigars and the most dramatic facial hair will help Dimon to live up to the Morgan legend.
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First Published: Sun, Mar 16 2008. 11 23 PM IST